NEW CHANNELS TO WATCH

NANCY BRUMBACK

Today's shoppers want and get their MTV, take for granted round-the-clock news and weather forecasts and shell out more than $12 million to watch Howard Stern's pay-per-view New Year's Eve party.

So it seems inevitable that supermarkets will find a way to harness the power of video and audio to sell products and generate excitement at the store level.

In-store video clearly remains an industry segment that still has a long way to go before its full potential is reached. But a growing number of chains are becoming increasingly involved in in-store video promotional experiments as a way to boost customer traffic and sales.

At the same time, in-store video's more traditional electronic broadcast cousin, in-store audio, continues to gain significant ground as a popular and relatively inexpensive way for retailers to reach shoppers, said industry executives interviewed by SN.

One of the biggest tests of in-store video monitors is a system developed by Site-Based Media, New York, and whose investors include Fleming Cos. and NBC. The system, On-Site Media, is being rolled out in a large number of chains. While it may not have taken the entire industry by storm yet, this and other systems like it are being greeted with considerable enthusiasm.

"Our initial response has been overwhelmingly positive. The retailers we work with report that customers are watching and responding to the advertising," said Phil Kalivoda, director of in-store media at Fleming Cos., Oklahoma City.

Sentry Markets, Waukesha, Wis., a Fleming division, is a prime example. The chain has had On Site monitors in its stores for about a year.

"People notice it. We've had both positive and negative comments, but much more positive," said Ron Lusic, Sentry's president. "More and more manufacturers are signing up for the program. It definitely seems to be working."

Sentry has six to eight monitors per store, located over gondolas in the grocery center of the store as well as in the frozens and dairy sections.

Pointing out that in-store merchandising of all types is increasing quickly, Lusic said retailers in general need to be more involved in testing electronic systems and offering customers a much wider range of choices in terms of promoting products.

Sentry, for its part, now uses in-store audio and coupon dispensers, and soon expects to test interactive kiosks as well. "We don't want to be left behind, so we'll test everything. There's no overall answer so far," said Lusic.

Foodarama Supermarkets, Freehold, N.J., also is testing video monitors in four of its stores. "The concept is excellent. It's a means of providing customers with additional information, and doing it in an entertaining fashion," said Ed Turkot, internal audit manager at the chain. Turkot is responsible for overseeing the installation of the videos at Foodarama.

The monitors are positioned over the gondolas, he said. "Customers may not stop, but they see the video."

On the other hand, skeptics about the merchandising potential of in-store television monitors point to the failure of cable mogul Ted Turner's Checkout Channel, which was discontinued in 1993 after being launched with great fanfare.

"There is a significant amount of scorched landscape after the Turner program," said Larry Wojciechowski, president of Retail Media Management, a Ridgefield, Conn.-based consulting firm.

Other retailers and wholesalers, however, argue that valuable lessons have been learned from the Turner experience, and that in-store broadcasting can succeed -- and succeed big-time -- in supermarkets.

Companies now are striving to succeed where Turner failed by avoiding two Checkout Channel tactics most often cited as key mistakes: too much noise and inconvenient positioning at the checkout.

On-Site Media's system, for example, is silent, and the monitors are positioned above the aisles rather than at the checkout. "There is so much other ambient noise in a supermarket that sound becomes an intrusion. We focus on communicating silently," said Gene Detroyer, vice president of retail for On Site.

Checkout Channel "came too late in the [in-store] purchasing process," said Betsy Tucker, senior consultant at Retail Systems Consulting, Chicago. "I think retailers have to test advertising in the aisle, even though there is still the risk that shoppers will tune out the advertising just as they sometimes do at home with television."

Fred Schneider, executive director for Andersen Consulting's Smart Store program, agreed that "promoting on the way out of the store is not the right time. Advertisers want to stimulate purchases" at the point of purchase.

Alan Stec, a former executive with Lucky Stores and Kroger Co. who now has his own firm, Stec Marketing, San Ramon, Calif., offered a different reason for the Turner failure. "They were vying for valuable checkout area space and were not willing to pay the placement money for it."

Many supermarket executives, though, remain enthusiastic about in-store video's potential to drive sales higher.

Abco Markets, Phoenix, currently has seven to nine video monitors in each of 17 of its 74 stores. "We agreed to test it because of the novelty, and because it involved silent TV. It has done a very good job for us," said Les Knox, Abco senior vice president of sales and marketing.

"The beauty is in the programming. The product is shown in color and the animation is good," he said.

Knox sees the future of video in the store "more in a sales message than in being interactive with consumers." The silent approach taken by the system at Abco's stores is especially important because it avoids the possibility of annoying shoppers with too much noise, he said.

The chain does not use instructional videocassettes in any of its departments, Knox added.

At P&C Food Markets, Syracuse, N.Y., a video promotional system is now in place, primarily for providing information and recipe tapes on monitors in the chain's perishables departments, including produce, meat and seafood.

"I'm not sure how much people want to be bombarded with advertising," said Sue Hosey, vice president of consumer affairs for P&C. "But I do think video can be successful, especially when shown at eye level and with the product."

While in-store video may still be in the initial growing stages in supermarkets, in-store audio is already widely accepted and increasingly used to boost consumers' spending habits.

Many retailers buy an audio service with advertising messages from suppliers such as POP Radio or Muzak. Others develop audio tapes in-house for their own stores.

Winn-Dixie Stores, Jacksonville, Fla., for example, buys its audio service. "We wouldn't want to spend the kind of money to do it ourselves until we have satellite hookups to every store," said Mickey Clerc, vice president and director of advertising. "Some customers like the audio and some don't. You can never please everybody. But overall we think it works well."

Fleming produces audio tapes for its 728 retailers in cooperation with Muzak, offering a combination of national and private-label ads, music and space for individual retailer ads, said Kalivoda.

Sentry uses an in-house audio product with a new tape every week, Lusic said. The audio mixes institutional ads with featured item and price promotions.

"Individual stores can also do their own promotions, for example, to promote a deli special. They can write a script, tape it and have it repeated at intervals in-store," said Lusic.

P&C also produces its own audio tapes, with music, chain promotions, individual product advertising and some educational material, such as nutrition information, said Hosey.

"Audio is still a very effective medium in-store," said Retail Media Management's Wojciechowski. "I think more retailers will become more actively involved in their in-store audio. Supermarkets are going back to their marketing roots, trying to communicate more with their customers.

"Audio has low production costs, and it's easy to maintain, though it does need good speakers and amplifiers to be heard well," he said.

Ed King, a consultant with Retail Shopper Services, Phoenix, said supermarkets can use audio especially effectively to "get back to a neighborhood concept with their customers."

Retail Shopper Services is experimenting with a program to sell advertising time on an individual supermarket's audio tape to small retailers, such as dry cleaners, within a mile and a half of the supermarket, King said.

Supermarkets can also use audio to reinforce other in-store merchandising efforts, for example, to remind shoppers which products will generate a coupon at the cash register, he said.

In contrast, King said video, with the exception of instructional and recipe broadcasts, is not a very good in-store medium because it is difficult for the retailer to control.

"The entertainment value is very important to in-store video," said Schneider of Andersen Consulting. "Customers have to perceive value. If it is purely advertising, in-store video is of limited value. If it is providing education or information, then there is definitely a role for it."

Tucker favors interactive and value-adding video over pure advertising for in-store use. "You can use infomercials in the store if they deliver valuable information," she said. "If it's just advertising, the customer will tune out. I like interactive video, but there is the question whether customers will take the time to use it."

But it clearly can work if the system is right. A Northeastern chain tested an interactive endcap kiosk called You Can Win, which included a slot machine on the screen and awards of cents-off coupons and an occasional free item. It "has had people standing in line to use it," said Tucker of Retail Systems Consulting.

"The best role for audio systems," Tucker added, "is cross-merchandising the store. For example, in a large combination store, audio can be used to increase awareness of other sections of the store. The effectiveness of audio may be difficult to measure, but intuitively it seems a benefit. The music may even be relaxing."